Buy 143 Shares of This Top Dividend Stock for $1,014 a Year in Passive Income

This dividend stock is great for passive income in two ways, and with a recent 20% share jump, now is the time to buy.

| More on:
top TSX stocks to buy

Source: Getty Images

Dividend stocks continue to offer stability and reliable income for investors. The North West Company (TSX:NWC) is a hidden gem in the Canadian stock market that provides a compelling case for those looking to invest in dividend stocks. With a generous dividend yield of 4.41%, a relatively low price-to-earnings ratio of 14.22, and a recent 20% jump in share price after strong earnings, let’s see how much is needed to create incredible income.

But first, why North West?

When looking at North West stock, the dividend yield is a critical factor for income investors. The North West Company offers a compelling dividend yield of 4.41%, significantly higher than the average yield in the Canadian market. This robust yield means that investors can enjoy a steady stream of income from their investment, making it an attractive choice for those who rely on dividends as a source of financial security.

Furthermore, the price-to-earnings (P/E) ratio is a crucial metric to consider. A lower P/E ratio suggests that a stock may be undervalued, potentially offering investors an opportunity for capital appreciation in addition to dividends. The North West Company’s P/E ratio of 14.22 indicates that it is trading at a reasonable valuation relative to its earnings. This makes it an appealing option for value-conscious investors, as they can acquire shares at a relatively modest price while still enjoying a strong dividend yield.

Then there are recent earnings. The North West Company recently made headlines by reporting impressive earnings results that led to a remarkable 20% increase in its share price. Such a significant jump is a testament to the company’s ability to deliver value to its shareholders. Not only did this boost share prices, but it also reaffirmed the company’s stability and growth potential. The strong earnings performance signals the company’s resilience in challenging economic conditions, a quality that is especially appealing for dividend investors who seek consistency and reliability.

How much to invest

Once you’ve taken all this into consideration, North West stock looks like a solid choice. But how much would investors need to pitch in for solid, safe income?

Let’s remember one thing. Passive income isn’t just dividends. It’s also returns. So, today, we’re going to see how much investors could create in passive income, taking into consideration both dividend income and returns to previous 52-week highs.

Let’s say then that you have $5,000 to invest. Shares of the stock are now at about $35. To reach 52-week highs, that would push the stock to $40.50. Now, let’s see what that could translate into.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
NWC – now$35143$1.56$223.08quarterly$5,000
NWC – highs$40.50143$1.56$223.08quarterly$5,791.50

Now, you’ve created $223.08 in annual dividend income, as well as $791.50 in returns. That comes to a grand total of $1,014.58!

Bottom line

For Canadian investors seeking reliable income in a market filled with uncertainty, The North West Company presents an appealing opportunity. With a generous dividend yield of 4.41%, a reasonable P/E ratio of 14.22, and recent strong earnings results that led to a 20% jump in share prices, this company offers a blend of income and potential for capital appreciation.

Its geographic resilience, history of dividend growth, and commitment to the communities it serves add to its attractiveness as a dividend stock. The North West Company should certainly be on the radar of income-focused investors who appreciate the value of consistency and stability in their portfolios.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends North West. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »